The development of currency is directly connected with the use of new technologies and the introduction of innovations. The digital development of financial technology invariably leads to the development of cryptocurrencies. 

Many financial technologies, previously perceived with skepticism, are fundamental to the smooth functioning of the financial system and contribute to stability at critical times.

The COVID-19 crisis accelerated the digitalisation of the payment industry bringing innovations and disruptive technologies at a faster rate than was predicted. Integration of technology, new knowledge production methods and the development of new information networks led drastic changes in the financial industry.

One of the innovations is cryptocurrency, treated with prejudice over the years, has now started to gain value. 

The attitude toward cryptocurrency has been quite controversial for many  years. The distrust is quite understandable as in general the finance industry digitalization was at its early stage. The situation has radically changed with COVID-19 bringing forward the digitization of the Financial sector.

Originally cryptocurrency and its benefits had purely academic intentions. Impossible to counterfeit, anonymity, peer-to-peer network was clear only to a limited number of crypto enthusiasts. However, very soon  the  opportunities provided by crypto and Blockchain—a distributed, decentralized ledger where individuals can anonymously transact and maintain records without an intermediary began to gain significant interest. 

The attempts to introduce digital currency were taken since 90s, but in 2008, the creator of Bitcoin, the pseudonymous Satoshi Nakamoto, published their white paper “Bitcoin: A Peer-to-Peer Electronic Cash System” to a cryptocurrency mailing list, and in early 2009 released the first Bitcoin software.Since then, Cryptocurrency has steadily been gaining weight in the Finance and Payment sector providing unique, not seen before opportunities for speeding up the payments digitalization.

Despite controversies caused by such reasons as instability, volatility and environmental impact in the course of mining, cryptocurrencies started to show durability and day by day improve their position as a solid viable alternative form of currency .

Probably one of the best success stories is Bitcoin. Previously neglected, the asset has passed one trillion dollars market cap and is considered the most reliable and popular crypto currency.

According to Statista, BTC reached a total of 60,000 USD in February and April of 2021. The reason is Tesla's 1.5 B Bitcoin Buy and following Coinbase events. In general, the market cap of cryptocurrencies is expected to hit $1087,7 billion by 2026. 

No doubt that the cryptocurrency is set to ignite the rise in digital payments. 

Cryptocurrencies offer a decentralized form of transaction without the involvement of any intermediaries, making it more convenient, fast and transparent. Due decentralization provided by blockchain crypto transactions presents a more secure way for a peer-to-peer direct transaction at lower cost by eliminating the third banked party and exchanging money directly. 

Another point is that cryptocurrency enabled unbanked layers to get access to payments and credits. Globally in fact, the number of people having access to the internet exceeds those who have access to banks or other currency exchange systems. This opens the opportunity for underprivileged people to establish credit.

One more reason is that cryptocurrency offers an opportunity for international business to make one-on-one exchanges online without the complications and added fees that traditionally come with international currency exchanges involving third parties.

Surely the advantages  make governments and businesses pay more attention to the opportunities offered by this disrupting technology. Still, despite the decentralised nature of cryptocurrency and its strong security in itself, the interaction of crypto with external circumstances still requires the regulations to stabilize the fluctuating young crypto market and provide more solid adoption of technology. 

Cryptocurrency and Fiat Currency - can there be a tandem?

Both fiat money and crypto, when assessing as the form of exchange medium, follow the same purpose. 

In terms of delivering the value both fiat and cryptocurrency deliver utility, not value, unlike intrinsic assets (gold, oil) that present perceivable value. 

Fiat currency delivers its value from governments decision while crypto is fully dependable on decentralized ledger. 

In other words, the potential of crypto on growth is sustained by governments’ uncertainty about the control, as fiat currencies are fully controllable and their issuance depends fully on the government decision following external and internal reasons.  Decentralization of cryptocurrency is the reason for concerns from governments as it means no authority can interfere in issuance and change its value.

However, taking into account the potential that most widely used cryptocurrencies like Bitcoin, Ethereum, Ripple hold in themselves, governments are on the verge of adopting this financially revolutionary form of assets.

The use of crypto related transactions increases day by day. Governments and large corporations are now much warmer to the idea of the cryptocurrency market and evaluating the most beneficial, and risk-averse way to facilitate crypto transactions. 

The cryptocurrencies are finding mainstream interest and adoption. The adoption process started from the private sector when major banks and financial institutions such as JPMorgan and Morgan Stanley started offering crypto products,  backed up the crypto sector and  began to introduce crypto-related transactions. 

The cryptocurrency market size is expected to grow from USD 1.6 billion in 2021 to USD 2.2 billion by 2026, at a CAGR of 7.1% according to MarketsandMarkets™ report. 

 Another example is El Salvador. The government i s looking ways to introduce legislation that will make it the world’s first sovereign nation to adopt bitcoin as legal tender, and although the World Bank rejected their request with the help of the implementation of crypto as legal tender, it’s still obvious that the country needs flexible, low fee and fast ways for transactions as the country’s economy economy relies heavily on remittances. 

One of the significant steps is the research of opportunities for launching Britcoin after British Government asked the Bank of England to explore the possibilities of introducing the British cryptocurrency to use alongside the Sterling. There is a long way to go but undoubtedly these opportunities presented by Britcoin outweigh the associated difficulties and unavoidable risks. 

Another example of growing interest in cryptocurrency from the mainstream financial sector is  Visa, one of the major systems, that announced the settlement of transactions with the use of USD Coin (USDC), a stablecoin, backed by the US dollar. 

And recently it has been announced that more than $1 billion was spent on crypto-linked Visa cards and Visa is in collaboration with more than 50 crypto-related platforms to launch card programs for crypto transactions. 

Surely adoption needs decisive measures to build a more sustainable future. It’s imperative to eliminate the challenging and concerning issues to adapt more efficiently. Still, the most important fact is that the digitalization and following it the development of cryptocurrency adoption is inevitable as it evolves taking into account the profound opportunities offered by disrupting technologies.